Wednesday, April 13, 2011

Global Recovery Gaining Strength (Video, GDP Charts) *IMF World Economic Outlook*


International Monetary Fund: World Economic Outlook

World Economic Outlook: Despite New Risks, Global Recovery Seen Gaining Strength

Official Statement by the International Monetary Fund (April 11, 2011): The global economic recovery is gaining strength, with world growth projected at about 4½ percent in both 2011 and 2012, but unemployment remains high, and risks of overheating are building in emerging market economies, the IMF said in its latest forecast. High commodity prices present new policy challenges, while old challenges - fiscal and financial repair and reform and the rebalancing of global demand - remain work in progress. “Given the improvement in financial markets, buoyant activity in many emerging and developing economies, and growing confidence in advanced economies, economic prospects for 2011–12 are good,” the IMF said in its April 2011 World Economic Outlook (WEO). However, disruptions to oil supply pose new risks to the recovery. “Fears have turned to commodity prices,” said Olivier Blanchard, Chief Economist at the IMF. “Commodity prices have increased more than expected, reflecting a combination of strong demand growth and a number of supply shocks. These increases conjure the specter of 1970s-style stagflation, but they appear unlikely to derail the recovery,” he told a press conference in Washington.

Key Points of the report are:
■ Global growth forecast at around 4 1/2 percent for both 2011 and 2012
■ High unemployment and commodities prices pose major social concerns
■ More progress urgently required on fiscal and financial repair and reform
■ Work needed to rebalance global demand, address imbalances

IMF Video (April 11, 2011) Although the global recovery is gaining strength, IMF Chief Economist Olivier Blanchard says unemployment remains high in advanced economies, and risks of overheating are building in emerging market economies.

IMF: GDP Actual and Projected by Year (Chart) Below is the IMF GDP Actual and Projected by Year for the World, USA, Euro Area, China and Japan. These are annual percentage growth rates. The chart is for 5 years: 2008 actual, 2009 actual, 2010 actual, 2011 projected, and 2012 projected.

IMF: GDP Actual and Projected by Year (Chart) Below is the IMF GDP Actual and Projected by Year for the UK, Brazil, Russia, and India. These are annual percentage growth rates. The chart is for 5 years: 2008 actual, 2009 actual, 2010 actual, 2011 projected, and 2012 projected.


The IMF World Economic Outlook continues optimistic in reporting the global recovery is gaining strength and appears sustainable. The reconstruction by Japan as a result of the catastrophic earthquake has been factored in and noted as, "the global macroeconomic impact would be limited". Important risks to the global recovery by both sovereign debt and financial system problems continue. Additional risks are "still-moribund real estate markets", high unemployment, rising food and commodity prices, and increasing oil prices.

Of interest is the recognition by the IMF, in both this report and the prior report, that a rebalancing of trade, and currency valuations, is necessary to increase exports from developed nations, in particular the USA. Of course, the developing nations, the export nations, would need to increase imports and/or decrease exports from developed nations in this rebalancing scenario. The USA and China trade relationship is a prime example of what the IMF is addressing. However, the issue is not just an adjustment of currency valuations but cost of labor. That is, cheap labor will offset the currency valuation adjustments to some extent.

About the IMF

Overview The International Monetary Fund (IMF) is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

What The IMF promotes international monetary cooperation and exchange rate stability, facilitates the balanced growth of international trade, and provides resources to help members in balance of payments difficulties or to assist with poverty reduction.

Membership The IMF has 187 member countries. It is a specialized agency of the United Nations but has its own charter, governing structure, and finances. Its members are represented through a quota system broadly based on their relative size in the global economy.

How Through its economic surveillance, the IMF keeps track of the economic health of its member countries, alerting them to risks on the horizon and providing policy advice. It also lends to countries in difficulty, and provides technical assistance and training to help countries improve economic management. This work is backed by IMF research and statistics.

Collaboration The IMF works with other international organizations to promote growth and poverty reduction. It also interacts with think tanks, civil society, and the media on a daily basis.

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* Data courtesy of the International Monetary Fund *

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